Buying a home is a goal many of us share. Having a place to call your own where you can remodel to your liking, not have to worry about neighbor’s footsteps above you, and finally be able to paint the walls bubblegum pink...or maybe that was just my five-year old self.
Owning a home is what many people would call the American Dream. However, it should not be done lightly. Becoming a homeowner is a substantial financial undertaking and requires significant planning. If this is a goal of yours, it’s best to start saving up for the down payment and related costs, as soon as possible.
Here are seven practical tips on saving up for your first home:
Determine your ideal location and research the average home costs in the area. Your area may even have a first-time homebuyer plan that can help reduce some of the costs. Plan on having to come up with 20% of the home cost in cash for the down payment. You likely won’t need that much for the down payment, but it’s a good idea to have the extra cash cushion because there are other additional costs that many people forget. Which leads us to the second step...
Calculate the approximate closing costs, moving expenses, and three months worth of insurance payments and maintenance costs. Often these costs are forgotten and can be not so fun surprise when they pop up.
Transfer your credit card balances to 0% and/or ask your credit card provider to lower your interest rate. This will help you save money on the interest payments on your current account balances. Money that can go towards your down payment savings account.
Open up a separate savings account. Be sure that the account is a high-interest earning account so you can make money on your money. Cha-ching! Check out Radius Bank’s high yield savings account. It’s APY* is one of the highest on savings accounts!
Create a plan. Determine how much you need to save and give yourself a deadline. Remember, a goal without a deadline is just a wish. Then you can determine how much you need to save each month in order to reach your goal.
Calculate your monthly expenses and see what can you eliminate. Cutting out expenses and being mindful of your spending choices will pay off in the long run. Some items you may want to consider are reducing restaurant visits, eliminating subscriptions or memberships you don’t use, excessive alcohol consumption or shopping sprees.
Pick up a side hustle. Having another income source outside of your full-time position gives you the flexibility to go after ambitious savings goals such as saving up for a home. Consider selling products on Amazon, monetizing the blog that you’ve been working on or teaching fitness classes. If you already have a small business, brainstorm ways that you can increase sales? The sky is the limit when you dream big and take massive action.
Now I’d love to hear from you! Are you currently saving up for a home or have you already purchased your home? What is one tip you can share that can help others realize their homeownership dream? Leave a comment below.
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This post was in partnership with Radius Bank.
*Annual Percentage Yield (APY) is accurate as of 12/19/17. Minimum amount to open account is $10.00. Rate tiers are as follows: 0.00% APY applies to balances of $0.01—$9.99, 0.05% APY applies to the entire balance on balances of $10.00—$2,499.99, and 1.30% APY applies to the entire balance on balances of $2,500 or more. Rates may change after account is opened. Fees may reduce earnings